June 14, 2010 -- A massive telephone sweepstakes scam targeting elderly Americans and exploiting the good names of the Make-A-Wish Foundation, the U.S. Federal Trade Commission, and Lloyds of London has escalated dramatically in recent weeks, officials with the Make-A-Wish charity told ABC News Monday.
The Arizona-based charity, which grants wishes to children with life-threatening illnesses, is trying to fight back. Make-A-Wish told ABC News it would be issuing a national fraud alert today in hopes of warning potential victims that telemarketers' promises of big payouts are part of a pernicious fraud scheme that reemerged in January four years after the U.S. Justice Department thought it had wiped out the scam.
One victim interviewed by ABC News last week, retired Pennsylvania elementary school teacher Robert Sussman, said he lost more than $23,000 in the con in March.
"It's a terrible loss. I was scammed. I was just scammed," Sussman told ABC News.
Sussman said that after he discovered he had been tricked into wiring the money he collapsed face down on his kitchen floor. Doctors later determined he had suffered a mild heart attack.
"I felt like I was ready to kill myself," he said. "I can't afford to part with $23,000."
He is not alone. Dozens of calls have come into the Make-A-Wish Foundation in recent weeks from victims of the scheme, in which a telemarketer purporting to be from an insurance company or a government agency calls to announce that the person has won a sweepstakes sponsored by the charity.
The targeted victim is told they need to wire an insurance payment or luxury tax payment in order to collect a prize, usually in the range of $350,000. Only there is no prize. The callers gain the aura of authenticity by using sophisticated internet phone technology that makes it look on caller ID systems like they are actually calling from a Washington, DC, exchange, and from an official-sounding government agency.
Victims Tricked into Paying "Luxury Taxes" in Advance
Over the course of several follow-up calls, the scammers give the victim names and numbers of people who verify the sweepstakes win, including supposed contacts at the IRS, the Federal Trade Commission (which investigates phone scams), Lloyds of London, and the Make-A-Wish Foundation. The contacts all have phone numbers that match the location of the outfit the victims are calling – so when Sussman called the Make-A-Wish contact provided by the scammer, he said he dialed an exchange in Arizona, where the foundation has its headquarters. When he called the IRS, he dialed a Washington, D.C., number. But the bogus contacts, authorities believe, were actually other con artists sitting in a boiler room somewhere offshore.
"The phone said 'IRS,'" Sussman said. "They told me the federal and state taxes were paid by the insurance carrier, but I must pay the luxury taxes to the IRS. They said the luxury taxes came to $23,500."
"This is a scam unlike any we have ever experienced before," said Paul G. Allvin, VP of marketing and communications for the Make-A-Wish Foundation of America, "both in terms of the amount of money that people are being tricked out of, and in terms of the lengths these scammers will go to convince callers they are actually federal agents,."
"Many of the victims truly believed they would receive hundreds of thousands, even millions, of dollars in return for paying these taxes in advance. And they often dug into their savings or raided their retirement nest eggs to pay the money," Allvin said. "It is a despicable act on the part of the scammers, particularly at a time when so many are suffering from the down economy."
Authorities believe the elaborate phone scheme is being run from call centers in Costa Rica, Jamaica, and other off-shore locations. Callers have made thousands of contacts in the U.S. since January.
Just four years ago, U.S. and Costa Rican authorities raided call centers, made dozens of arrests, and convicted several American and Canadian citizens in what was said to be a $20 million telephone scheme. Two ringleaders, New Yorker Michael Attilio Mangarella and Canadian Giuseppe Pileggi, both got 50-year prison sentences.
In police raids, federal agents gathered hundreds of scripts outlining the bogus phone pitches, spreadsheets showing how much money each victim had wired in, and massive so-called "sucker lists" with phone numbers of potential marks.
"Sucker Lists" Target the Elderly
Officials thought they had shut down the scheme, but Allvin of the Make-A-Wish Foundation said his organization began getting panicked calls from new victims earlier this year. Both the charity and the insurance carrier named in the bogus calls, Lloyds of London, have recently posted alerts on their web sites.
"A number of individuals have reported to us that they, or a family member or a friend, have received a phone call informing them they have allegedly won hundreds of thousands of dollars (e.g., $350,000) in a sweepstakes or lottery associated with the Make-A-Wish Foundation," one warning says. "These individuals have been told that, in order to claim their 'prize,' they must first wire money to cover taxes and insurance on the supposed winnings. This is a scam. The Make-A-Wish Foundation is NOT associated with any kind of sweepstakes or lottery; and it has always had a strict policy prohibiting any sort of telemarketing in its name."
The Federal Trade Commission, which is frequently mentioned in connection with the telephone sweepstakes scam, has issued a consumer alert urging anyone who receives such a call to file a complaint with the real FTC at ftc.gov or by calling 1-877-FTC-HELP.